Sometimes, if I have a long drive to take in the afternoon, I will put on Rush Limbaugh to see what he’s talking about.
One day, he was talking about the Obama personal finance plan, or something like that. He said that you should not try to get your spending under control, but continue to spend beyond your means and put everything on credit, max out your credit cards, take out loans, etc.
It was a joke, obviously, based on the fact that President Obama is borrowing against our country’s future to fund massive government spending.
I don’t think Rush has any idea how close he was to the real Obama family finance history.
In April 1999, they purchased a Chicago condo and obtained a mortgage for $159,250. In May 1999, they took out a line of credit for $20,750. Then, in 2002, they refinanced the condo with a $210,000 mortgage, which means they took out about $50,000 in equity. Finally, in 2004, they took out another line of credit for $100,000 on top of the mortgage.
Tax returns for 2004 reveal $14,395 in mortgage deductions. If we assume an effective interest rate of 6%, then they owed about $240,000 on a home they purchased for about $159,250.
This means they spent perhaps $80,000 beyond their income from 1999 to 2004.
The Obama’s adjusted gross income averaged $257,000 from 2000 to 2004. This is above the threshold of $250,000 which Obama initially used as the definition of being “rich” for taxation purposes during last year’s election campaign.
The Obama family apparently had little or no savings during this period since there was virtually no taxable interest shown on their tax returns.
No wonder he wants us all to bail out deadbeat mortgagees. Apparently, he sees nothing wrong with borrowing beyond your means.